McCaughtry v. City of Red Wing

• Citation: 808 N.W.2d 331
• Decision Date: 28 December 2011
• Docket Number: No. A10–0332.,A10–0332.
• Parties: Robert McCAUGHTRY, et al., Appellants, v. CITY OF RED WING, Respondent.
• Court: Supreme Court of Minnesota (US)

808 N.W.2d 331

Robert McCAUGHTRY, et al., Appellants,

v.CITY OF RED WING, Respondent.

No. A10–0332.

Supreme Court of Minnesota.

Dec. 28, 2011.

Syllabus by the Court

A facial challenge to the constitutionality of a rental property inspection ordinance presents a justiciable controversy where the properties of the landlords and tenants bringing the declaratory judgment action have been subject to three applications for administrative warrants over a four-year period.

Lee U. McGrath, Institute for Justice, Minnesota Chapter, Minneapolis, MN; and

Dana Berliner, Institute for Justice, Arlington, VA, for appellants.

John M. Baker, Kathryn M.N. Hibbard, Greene Espel PLLP, Minneapolis, MN, for respondent.

Teresa Nelson, Jessica Arck, St. Paul, MN, for amicus curiae American Civil Liberties Union of Minnesota.David F. Herr, Haley N. Schaffer, Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, for amici curiae Dean Eric Janus and Professors Roger S. Haydock and Gregory Sisk.Charles R. Shreffler, Shreffler Law, PLLC, Hopkins, MN, for amicus curiae Minnesota Family Institute.Jarod M. Bona, DLA Piper LLP, Minneapolis, MN, for amicus curiae St. Paul Association of Responsible Landlords.Erick G. Kaardal, Mohrman & Kaardal, P.A., Minneapolis, MN, for amici curiae legal scholars Ryan Scott and Samuel Bray.

OPINION

MEYER, Justice.

The issue in this case is whether landlords and tenants whose properties have been subject to repeated applications for administrative warrants may bring a declaratory judgment action challenging the constitutionality of a rental property inspection ordinance. The ordinance, enacted by respondent City of Red Wing, requires inspections of rental property before landlords may obtain operating licenses. The City may conduct inspections with the consent of the landlord or tenant or, in the absence of consent, by application for and judicial approval of an administrative warrant. Appellants are nine landlords and two tenants who have refused to consent to inspections of their properties and have successfully challenged three separate applications for administrative warrants. This appeal concerns the justiciability of appellants' declaratory judgment action seeking to have the rental inspection ordinance declared unconstitutional. The court of appeals affirmed the district court's dismissal of the declaratory judgment action for lack of standing, concluding that appellants had not alleged an injury that was actual or imminent. McCaughtry v. City of Red Wing, No. A10–332, 2010 WL 3744638, at *2–4 (Minn.App. Sept. 28, 2010). We reverse, concluding that the challenge to the constitutionality of the rental inspection ordinance presents a justiciable controversy.

In 1997 the City of Red Wing commissioned a study of housing needs and conditions in the City. City of Red Wing, Red Wing Housing Study 2 (2003). The study found significant problems in the City's rental housing stock, “including health and safety issues, age of the housing stock, older converted buildings, lack of maintenance of rental properties, ... absentee landlords, [and] violations of codes.” Id. at 77–78. The study, noting “the success other cities have had in implementing rental inspection programs,” recommended that the City implement its own rental inspection program. Id. at 78. The study was updated in 2003. Id. at 2. The update repeated the original study's recommendation that the City adopt a rental inspection program “to assure that all rental units in Red Wing comply with housing laws and codes,” thus “removing blighted and unsafe conditions.” Id.

The City adopted the recommendation and enacted a rental inspection and licensing ordinance in February 2005 as part of its Housing Maintenance Code (HMC) and Rental Dwelling Licensing Code (RDLC). See Red Wing, Minn., City Code §§ 4.03–.04 (2011). The RDLC requires inspections of residential rental dwellings every seven years. Id. § 4.04, subd. 1(A)(2), (C). Property must be inspected before the City will issue or renew a seven-year operating license, although landlords may obtain temporary two-year permits allowing them to rent property for which an operating license has not yet been issued. Id. § 404, subd. 1(A)(1).

Under the ordinance, the City may inspect rental properties either by consent or by judicial issuance of a warrant. Id. § 4.04, subd. 1(C)(8)–(9). The ordinance calls for the City to seek consent from landlords and tenants to perform an inspection. Id. § 4.04, subd. 1(C)(8). If consent is withheld, the City must “seek permission, from a judicial officer through an administrative warrant, for its enforcement officer or his or her agents to conduct an inspection.” Id. § 4.04, subd. 1(C)(9). The ordinance does not describe the procedures for seeking a warrant or the conditions under which a warrant should be granted; the ordinance simply provides that “[n]othing in this Code shall limit or constrain the authority of the judicial officer to condition or limit the scope of the administrative warrant.” Id. In addition, the ordinance does not require that the City provide notice to a landlord or tenant that the City is seeking an administrative warrant. See id.

In 2006 the City sought its first administrative warrant in Goodhue County District Court in connection with appellants' rental properties. Appellants challenged the warrant application on several grounds, including claims of unconstitutionality. The district court denied the application on nonconstitutional grounds, finding that the rental inspection ordinance authorized an inspection only when (1) a rental license application had been executed, and (2) there was reason to believe a code violation exists. The City subsequently amended the ordinance, adding language that limited the scope of inspections to that necessary to determine whether the rental properties conformed to the HMC. See Red Wing, Minn., City Code § 4.04, subd. 1(C)(10).

At the same time appellants were opposing the City's application for an administrative warrant, they filed a separate declaratory judgment action in Goodhue County District Court, challenging the City's rental inspection ordinance on Fourth Amendment grounds. Appellants sought declaratory and injunctive relief. The City removed this action to federal district court. The federal court granted the City's motion for summary judgment. Stewart v. City of Red Wing, 554 F.Supp.2d 924, 931 (D.Minn.2008). The court determined that appellants had not suffered an actual injury in fact or “demonstrated that injury to their Fourth Amendment rights is imminent.” Id. at 929. The court reasoned:

Plaintiffs' properties have not in fact been searched or inspected by the City, and no search warrants have been issued by a reviewing state court judge. To the extent plaintiffs contend that the RDLC coerces their consent to an illegal search, none of the plaintiffs in this case has yet consented to a search of his or her rental property. Rather, plaintiffs have insisted on exercising their Fourth Amendment rights, demanding that the City seek an administrative warrant from a reviewing state court judge. Indeed, plaintiffs successfully challenged the City's first warrant application, effectively insulating their constitutional rights from injury through state court litigation. Further, plaintiffs continue to rent property through the use of temporary rental permits....

Id. The court also stated that “[n]othing in the record suggests to this Court that a reviewing state court could not adequately review and limit the city's warrant application to ensure the warrant complies with the Fourth Amendment.” Id. at 930. Therefore, the court concluded the alleged constitutional injury is “too speculative” to afford relief under Article III. Id. at 931. The court did not address the substance of appellants' constitutional challenge, but did observe that the issues “present difficult questions of Fourth Amendment doctrine.” Id. The court ultimately remanded the matter to state court.

On remand, the Goodhue County District Court consolidated three different matters: (1) the remanded action from federal court; (2) a new declaratory judgment action brought by appellants challenging the constitutionality of the rental inspection ordinance; and (3) the City's second application for an administrative warrant, which had been stayed pending the federal court's decision. The state court denied the City's second application for an administrative warrant on the basis that the City had not put limits on the hypothetical future use of information that might be gained through the inspection program.

Following this ruling, the Red Wing City Council amended the rental inspection ordinance a second time. Under the amended version of the ordinance, an administrative warrant is required before the City may inspect a nonconsenting tenant's unit or the common areas of a nonconsenting landlord's property. Red Wing, Minn., City Code § 4.04, subd. 1(C)(8)–(9). The City also amended the ordinance to address the state court's privacy concerns. See id. § 4.04, subd. 1(C)(16)–(17).

In 2009 the City submitted a third application for an administrative warrant to inspect appellants' rental properties. In the state court proceeding that is the subject of this appeal, appellants made a number of arguments challenging the constitutionality of the ordinance. Appellants argued that the administrative warrant mechanism violates Article I, Section 10, of the Minnesota Constitution, which appellants contend requires individualized probable cause to search an occupied building. Appellants also argued that the City's third application for an administrative warrant failed to satisfy minimal federal constitutional standards for housing inspections.¹ The City defended the application for an administrative warrant and challenged appellants' standing to assert the constitutional claims in the declaratory judgment action. The district court denied the...